Small cap audio technology stock Parametric Sound Corp (NASDAQ: PAMT) not only has a technology that literally sounds good, its stock performance has sounded fantastic for investors as shares are up 177.4% since the start of the year and up 342.4% over the past year. However, what's driving Parametric Sound Corp’s stock performance and will it continue to sound great for investors or will it hit an off note?
What is Parametric Sound Corp?
Parametric Sound Corp was a wholly owned subsidiary of LRAD Corporation and 100% spun off on September 27, 2010 as a stand-alone, independent, publicly-traded small cap company focused on delivering novel audio solutions such as the HyperSoundTM System (HSS®) technology which creates sound in a new way - "in-the-air" along a directional ultrasonic beam. This is a significant departure from traditional speaker technology as Parametric Sound Corp can beam, focus and control sound which empowers commercial solutions such as digital signage, kiosks, electronic gaming (slot machines), home 3D audio and much more.
It should also be mentioned that Parametric Sound Corp has a licensing strategy to identify large or high-growth markets, develop needed technology solutions and features and then work with established industry players and OEMs to make products for consumers.
What’s Driving Parametric Sound Corp’s Share Performance?
Early in April, Parametric Sound Corp issued a corporate update to note it has received substantial licensing proposals for the HyperSound™ technology for key market verticals (from unnamed companies though) plus the company has retained an investment bank (which was announced back in March) after being approached by “several industry leaders in key target verticals to pursue strategic discussions.” However, Parametric Sound Corp also stated its deferring decisions to execute licenses as it assesses strategic opportunities and actively pursues strategic discussions. To me, it sounds like Parametric Sound Corp could be rising in large part due to speculation it will be acquired or will get its technology licensed to some big well known name – something investors for the long haul need to be leery of because if no deal materializes, the stock will likely drop.
Back in February, Parametric Sound Corp reported first quarter earnings and it should be mentioned that as of the end of last year, the company had cash and cash equivalents of $4.7 million verses $5.5 million as of September 30th. As for financials, Parametric Sound Corp has reported revenues of $234k (fiscal 2012), $79k (fiscal 2011) and $607k (fiscal 2010) along with net losses of $4,462k (fiscal 2012), $1,484k (fiscal 2011) and $923k (fiscal 2010) – meaning the company probably has enough cash on hand to get through this year.
Apart from Parametric Sound Corp’s financials and its technology, investors should be aware that in early January, the company had to issue a press release in response another press release from Faruqi & Faruqi, LLP, a so-called shareholder rights law firm that’s a familiar name to anyone who reads headlines about stocks as they are usually doing “investigations” or rather filing lawsuits against lots of publicly traded companies. In Parametric Sound Corp’s press release, the company said that it believes the approval of a 2012 Stock Option Plan Amendment is in the best interests of the Company and its stockholders.
Otherwise and according to HighShortInterest.com, Parametric Sound Corp has short interest of 20.49% and the stock has also been the target of articles on financial websites from apparent short sellers – meaning if it keeps rising, there could be a short squeeze.
Stock Performance: Parametric Sound Corp
On Tuesday, small cap Parametric Sound Corp rose 1.92% to $19.11 (PAMT has a 52 week trading range of $3.49 to $21.99 a share) for a market cap of $122.50 million plus the stock is up 177.4% since the start of the year and up 342.4% over the past year:
Traders and any investors who like to look at technical charts should review the following chart for Parametric Sound Corp:
The Bottom Line. At the end of the day or at least for the long term, a bet on Parametric Sound Corp by more conservative investors should be a bet on its technology rather than speculation about acquisitions or potential licensing deals. With that said, investors who are also traders and not adverse to risk might still want to bet on Parametric Sound Corp or its technology being acquired.